Consistently Investing $850 a Month x 10 Years = $160,000 (2014-2023)

January 22, 2024 By Jonathan Ping 1 Comment
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Instead of only looking at year-to-date or last year’s return numbers that are often quoted in the media, I always try to also take a longer-term perspective (especially on down years) by looking back over a longer period. How would a steady investor have done over the last decade?

Target date funds. The Vanguard Target Retirement 2045 Fund is an all-in-one fund that is low-cost, globally-diversified, and available both inside many employer retirement plans and to anyone that funds an IRA. It currently holds over $75 billion in assets. When you are younger (up until age 40 for those retiring at 65), this fund holds 90% stocks and 10% bonds. It is a solid default choice in a world of mediocre, overpriced options. This is also a good benchmark for others that use low-cost index funds.

The power of consistent, tax-advantaged investing. For the last decade, the maximum allowable annual contribution to a Traditional or Roth IRA has been roughly $5,000 per person. The maximum allowable annual contribution for a 401k, 403b, or TSP plan has been over $10,000 per person. If you have a household income of $67,000, then $10,000 is right at the 15% savings rate mark. Therefore, I’m going to use $10,000 as a benchmark amount. This round number also makes it easy to multiply the results as needed to match your own situation. Save $5,000 a year? Halve the result. Save $20,000 a year? Double the numbers, and so on.

The real-world payoff from a decade of saving $833 a month. What would have happened if you put $10,000 a year into the Vanguard Target Retirement 2045 Fund, every year, for the past 10 years? With the interactive tools at Morningstar and a Google spreadsheet, we get this:

Investing $10,000 every year ($833 a month, or $384 per bi-weekly paycheck) for the last decade would have resulted in a total balance of approximately $159,000. That’s $100,000 in steady contributions and $59,000 in investment gains.

Early + Steady is better. There is a popular example of the power of compound interest that shows how someone who started saving at age 25, saves and invests for 10 years but then stops and never saves a penny again still beats someone who starts saving at 35 and keeps on saving for 30 years. Acorns provides a nice illustration:

Early + Steady + Longer is even better. The “Rule of 72” shows us that with just 7.2% annual returns, your money will double every decade from now on. After another 10 years, every $100k will be $200k. After another 10 years, that $200k will be $400k. Once you have that initial momentum, it just keeps going.

Now throw in half of your annual salary increases, and you’ll be honestly surprised at what it grows to after 20 years.

Here are my previous “Saving for a decade” posts:

Bottom line. Over time, with consistency and starting early, the yearly investment return swings smooth out. You can truly build serious wealth with something as accessible and boring as automated investments in a IRA/401k plan buying a Vanguard Target Retirement fund (or a simple collection of low-cost index funds).

Filed Under: Inspirational, Investing, Retirement
Last updated: January 21, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – January 2024

January 9, 2024 By Jonathan Ping 10 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

If you’re leaving your cash in a checking account at most major banks, you’re probably earning zero interest. With an online application, you could earn a lot more money while keeping the same level of safety by moving to another FDIC-insured bank or NCUA-insured credit union.

Here’s my monthly roundup of the best interest rates on cash as of January 2024, roughly sorted from shortest to longest maturities. There are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 1/8/2024.

TL;DR: Rates are dropping at longer maturities, in expectation of future Fed rate drops. Still 5%+ savings accounts, but no more 5-year CDs at 5% APY. Compare against Treasury bills and bonds at every maturity, taking into account state tax exemption.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5.32% APY ($1 minimum). Raisin lets you switch between different FDIC-insured banks and NCUA-insured credit unions easily without opening a new account every time, and their liquid savings rates currently top out at 5.32% APY. See my Raisin review for details. Raisin does not charge depositors a fee for the service.
  • 5.36% APY (before fees). MaxMyInterest is another service that allows you to access and switch between different FDIC-insured banks. You can view their current banks and APYs here. As of 12/6/23, the highest rate is from Customers Bank at 5.36% APY. However, note that they charge a membership fee of 0.04% per quarter, or 0.16% per year (subject to $20 minimum per quarter, or $80 per year). That means if you have a $10,000 balance, then $80 a year = 0.80% per year. This service is meant for those with larger balances. You are allowed to cancel the service and keep the bank accounts, but then you may lose their specially-negotiated rates and cannot switch between banks anymore.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, everyone should have a separate, no-fee online savings account to piggy-back onto your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates and solid user experience. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Raisin has a 5-month No Penalty CD at 5.40% APY with $1 minimum deposit and 30-day minimum hold time. CIT Bank has a 11-month No Penalty CD at 4.90% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 4.55% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 4.70% APY with a $500 minimum deposit. Consider opening multiple CDs in smaller increments for more flexibility.
  • CIBC Agility Online has a 12-month CD at 5.51% APY. Reasonable 30-day penalty if you withdraw your CD funds before maturity.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 5.29% (changes daily, but also works out to a compound yield of 5.42%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 5.49% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 5.30% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes, which can make a significant difference in your effective yield.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 1/8/24, a new 4-week T-Bill had the equivalent of 5.39% annualized interest and a 52-week T-Bill had the equivalent of 4.83% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 5.45% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 5.21% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2023 and April 2024 will earn a 5.27% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • OnPath Federal Credit Union pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization. You can also get a $100 Visa Reward card when you open a new account and make qualifying transactions.
  • Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
  • Pelican State Credit Union pays 6.05% APY on up to $20,000 if you make 15 debit card purchases, opt into online statements, log into your account at least once, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
  • Orion Federal Credit Union pays 6.00% APY on up to $10,000 if you make electronic deposits of $500+ each month (ACH transfers count) and spend $500+ on your Orion debit or credit card each month. Anyone can join this credit union via $10 membership fee to partner organization membership.
  • All America/Redneck Bank pays 5.30% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • United States Senate Credit Union has a 60-month CD at 4.86% APY with $1,000 minimum. Jumbo CDs have slightly higher rates ($100k+, $200k+). The early withdrawal penalty is 360 days of interest. Anyone can join this credit union via partner organization.
  • BMO Alto has a 5-year CD at 4.60% APY. 4-year at 4.60% APY. 3-year at 4.60% APY. 2-year at 4.75% APY. 1-year at 5.50% APY. No minimum. The early withdrawal penalty (EWP) for CD maturities of 1 year or more is 180 days of interest. For CD maturities of 11 months or less, the EWP is 90 days of interest. Note that they reserve the right to prohibit early withdrawals entirely. Online-only subsidiary of BMO Bank.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year non-callable CD at 4.05% APY (callable: no, call protection: yes). Be warned that now both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 3.8% (callable: no, call protection: yes) vs. 4.01% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 1/8/2023.

Photo by micheile henderson on Unsplash

Filed Under: Banking, Deals & Offers, Investing
Last updated: February 5, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

MMB Portfolio Dividend & Interest Income Update – Year-End 2023

January 8, 2024 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Here’s my quarterly income update as a companion post to my MMB Portfolio Year-End 2023 performance update. I prefer to track the income produced as an alternative metric to performance. The total income goes up much more gradually and consistently than the number shown on brokerage statements (market price), which helps encourage consistent investing. Here’s a related quote from Jack Bogle (source):

The true investor will do better if he forgets about the stock market and pays attention to his dividend returns and to the operating results of his companies. – Jack Bogle

Here is the historical growth of the S&P 500 total dividend, which tracks roughly the largest 500 stocks in the US, updated as of Q3 2023 (via Yardeni Research):

That is a much smoother ride than the price index. I imagine my portfolio as a factory that churns out dollar bills, or a tree that gives dividend fruit.

More details on dividends. Stock dividends are a portion of profits that businesses have decided to distribute directly to shareholders, as opposed to reinvesting into their business, paying back debt, or buying back shares. The dividends may suffer some short-term drops, but over the long run they have grown faster than inflation.

In the US, the dividend culture is somewhat conservative in that shareholders expect dividends to be stable and only go up. Thus the starting yield is lower, but grows more steadily with smaller cuts during hard times. Here is the historical growth of the trailing 12-month (ttm) dividend paid by the Vanguard Total US Stock ETF (VTI) via StockAnalysis.com.

European corporate culture tends to encourage paying out a higher (sometimes fixed) percentage of earnings as dividends, but that also means the dividends move up and down with earnings. The starting yield is currently higher but may not grow as reliably. Here is the historical growth of the trailing 12-month (ttm) dividend paid by the Vanguard Total International Stock ETF (VXUS).

The dividend yield (dividends divided by price) also serve as a rough valuation metric. When stock prices drop, this percentage metric usually goes up – which makes me feel better in a bear market. When stock prices go up, this percentage metric usually goes down, which keeps me from getting too euphoric during a bull market.

My portfolio income history. I started tracking the income from my portfolio in 2014. Here’s what the annual distributions from my portfolio look like over time:

  • $1,000,000 invested in my portfolio as of January 2014 would started out paying ~$24,000 in annual income over the previous 12 months. (2.4% starting yield)
  • If I reinvested the dividends/interest every quarter but added no other contributions, as of January 2024 it would have generated ~$50,000 in annual income over the previous 12 months.
  • If I spent all the dividends/interest every quarter and added no other contributions, as of January 2024 it would have generated ~$37,000 in annual income over the previous 12 months.

This chart shows how the annual income generated by my portfolio has increased over time and with dividend reinvestment.

Isn’t that a more pleasant way to track your progress?

TTM income yield. To estimate the income from my portfolio, I use the weighted “TTM” or “12-Month Yield” from Morningstar (checked 1/5/24), which is the sum of the trailing 12 months of interest and dividend payments divided by the last month’s ending share price (NAV) plus any capital gains distributed (usually zero for index funds) over the same period.

My ttm portfolio yield is now roughly 2.63%, about the same as last quarter’s value. That means if my portfolio had a value of $1,000,000 today, I would have received $26,300 in dividends and interest over the last 12 months.

What about the 4% rule? For goal planning purposes, I support the simple 4% or 3% rule of thumb, which equates to a target of accumulating roughly 25 to 33 times your annual expenses. I would lean towards a 3% withdrawal rate if you want to retire young (closer to age 50) and a 4% withdrawal rate if retiring at a more traditional age (closer to 65). I truly believe too much time is spent debating this number. It’s just a quick and dirty target to get you started, not a number sent down from the heavens!

During the accumulation stage, your time is better spent focusing on earning potential via better career moves, improving in your skillset, and/or looking for entrepreneurial opportunities where you can have an ownership interest.

As a semi-retired investor that has been partially supported by portfolio income for a while, I find that tracking income makes more tangible sense in my mind and is more useful for those who aren’t looking for a traditional retirement. Our dividends and interest income are not automatically reinvested. They are another “paycheck”, as our other paychecks now vary much more than before. Then, as with a traditional paycheck, we can choose to either spend it or invest it again to compound things more quickly. Even if we spend the dividends, this portfolio paycheck will still grow over time. You could use this money to cut back working hours, pursue a different career path, start a new business, take a sabbatical, perform charity or volunteer work, and so on.

Right now, I am trying to fully appreciate the “my kids still think I’m cool and want to spend time with me” period of my life. It won’t last much longer. Whenever I ask for a hug, I get one! (I’m actually dreading when I have to delete this sentence from my updates!) I am consciously choosing to work when they are at school but also consciously turning down work that doesn’t fit my priorities and goals. This portfolio income helps me do that.

Filed Under: Goals, Investing, Retirement
Last updated: January 8, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

MMB Portfolio Asset Allocation & Performance Update – Year-End 2023

January 7, 2024 By Jonathan Ping 12 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Here’s my year-end 2023 update for my investment holdings (published January 2024), including all of our combined 401k/403b/IRAs and taxable brokerage accounts but excluding our primary residence and side portfolio of self-directed investments. Following the concept of skin in the game, the following is not a recommendation, but a sharing of our real-world, imperfect, low-cost, diversified DIY portfolio.

“Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have in their portfolio.” – Nassim Taleb

How I Track My Portfolio
Here’s how I track my portfolio across multiple brokers and account types. There are limited free advanced options after Morningstar discontinued free access to their portfolio tracker. I use both Empower Personal Dashboard (previously known as Personal Capital) and a custom Google Spreadsheet to track my investment holdings:

  • The Empower Personal Dashboard real-time portfolio tracking tools (free) automatically logs into my different accounts, adds up my various balances, tracks my performance, and calculates my overall asset allocation daily. Formerly known as Personal Capital.
  • Once a quarter, I also update my manual Google Spreadsheet (free to copy, instructions) because it helps me calculate how much I need in each asset class to rebalance back towards my target asset allocation. I also create a new tab each quarter, so I have an archive of my holdings dating back many years.

2023 Year-End Asset Allocation and YTD Performance
Here are updated performance and asset allocation charts, per the “Holdings” and “Allocation” tabs of my Empower Personal Dashboard.

Humble Portfolio Background. I call this my “Humble Portfolio” because it reminds me to accept the repeated findings that the ability to know when stocks or bonds will outperform is exceedingly rare. Charlie Munger believes that only 5% of professional money managers have the skill required to consistently beat the index averages after costs.

Instead, by paying minimal costs including management fees, transaction spreads, and tax drag, you can essentially guarantee yourself above-average net performance over time.

I own broad, low-cost exposure to productive assets that will provide long-term returns above inflation, distribute income via dividends and interest, and finally offer some historical tendencies to balance each other out. I have faith in the long-term benefit of owning businesses worldwide, as well as the stability of high-quality US Treasury debt. My stock holdings roughly follow the total world market cap breakdown at roughly 60% US and 40% ex-US. I add just a little “spice” to the broad funds with the inclusion of “small value” factor ETFs for US, Developed International, and Emerging Markets stocks as well as diversified real estate exposure through US REITs.

I strongly believe in the importance of knowing WHY you own something. Every asset class will eventually have a low period, and you must have strong faith during these periods to earn those historically high returns. You have to keep owning and buying more stocks through the stock market crashes. You have to maintain and even buy more rental properties during a housing crunch, etc. A good sign is that if prices drop, you’ll want to buy more of that asset instead of less. I don’t have strong faith in the long-term results of commodities, gold, or bitcoin – so I don’t own them.

I do not spend a lot of time backtesting various model portfolios, as I don’t think picking through the details of the recent past will necessarily create superior future returns. You’ll find that whatever model portfolio is popular at the moment just happens to hold the asset class that has been the hottest recently as well.

Find productive assets that you believe in and understand, and just keep buying them through the ups and downs. Mine may be different than yours.

I have settled into a long-term target ratio of roughly 70% stocks and 30% bonds (or 2:1 ratio) within our investment strategy of buy, hold, and occasionally rebalance. My goal has evolved to more of a “perpetual income portfolio” as opposed to the more common “build up a big stash and hope it lasts until I die” portfolio. My target withdrawal rate is 3% or less. Here is a round-number breakdown of my target asset allocation along with my primary ETF holding for each asset class.

  • 30% US Total Market (VTI)
  • 5% US Small-Cap Value (VBR)
  • 20% International Total Market (VXUS)
  • 5% International Small-Cap Value (AVDV)
  • 10% US Real Estate (REIT) (VNQ)
  • 15% US “Regular” Treasury Bonds or FDIC-insured deposits
  • 15% US Treasury Inflation-Protected Bonds (or I Savings Bonds)

Performance details. According to Empower, my portfolio is up about 15.1% for 2024. The S&P 500 is up about 25% YTD, while the US Bond index is up around 6%. My overall return lagged the US broad market due to my international stock holdings and bond holdings, but I am still happy with my risk positioning (also see above regarding ups and downs).

Yet again, there was little action on my part this year. I didn’t sell a single share of anything, and that’s how I like it. I did reinvest some dividends and interest into TIPS, but the timing plus the year-end bull run of the US stock market still left me again with a higher stock percentage. Unless something extreme happens, I plan to use my future cashflows to rebalance back into bonds.

I’ll share about more about the income aspect in a separate post.

Filed Under: Goals, Investing, Retirement
Last updated: January 8, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Fidelity Bloom App: Fintech App from Traditional Broker

January 3, 2024 By Jonathan Ping 20 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Update July 2024: Looks like Fidelity is ending this little experiment. They are no longer accepting new applications. It was fun to try out and collect the various incentives.

Update January 2024: If you have the Fidelity Bloom app, this is a reminder that the 10% annual savings match is reset and you can again get $30 for a $300 transfer into your Fidelity Bloom Save account. If you use the SPAXX option for cash sweep, you are also earning close to the equivalent of 5% APY (as of 1/3/24). Here is a screenshot of my 2023 rewards:

Full review:

Fidelity Bloom is a new(er) app from Fidelity Investments targeted at helping young adults become more financially aware and develop better savings habits. iOS and Android. Fidelity has included many “behavioral psychology” features from other fintech startup apps like a match on savings transfers, debit card cash back rewards, rounding-up purchases and saving the difference, and shopping portal cashback. The highlights:

  • (No new user bonus at the moment. Was $100.)
  • 10% annual savings match (up to $30). Get a 10% match on the first $300 saved into their Bloom Save account (up to a $30 match on $300 of new money deposited).
  • 10 cents from Fidelity with every debit card purchase. Fidelity will automatically deposit a fixed 10 cents into the Fidelity Bloom Save account every time customers use the Fidelity Bloom debit card. Reminds me of the Citi Rewards+ credit card.
  • Automatically round up purchases into savings. Customers can automatically round up purchases to the nearest dollar and have the difference moved to savings from their Fidelity Bloom Spend to their Fidelity Bloom Save account.
  • Up to 25% cashback through shopping portal. Receive up to 25% cash back into your Fidelity Bloom Save account when you shop in-app with 1,100+ participating retailers.

Interest rate is competitive (up to ~5% as of 1/3/24 with SPAXX), but it’s a brokerage account. Is it a bank account? Is it a brokerage account? It’s a SIPC-insured brokerage account:

The Fidelity Bloom App is designed to help with your saving and spending behaviors through your Save and Spend accounts, which are brokerage accounts covered by SIPC insurance. They are not bank accounts and therefore are not covered by FDIC insurance.

You do get a routing number and account number for your two accounts, but the cash is held like their other non-retirement accounts. During the sign-up process, you can pick between one of three options for your core position:

  • Fidelity® Interest-Bearing Option (FCASH)
  • Fidelity Government Money Market Fund (SPAXX)
  • Fidelity Treasury Money Market Fund (FZFXX)

Although I have confidence in Fidelity’s long-term experience and conservatism in running these money market mutual funds, the lack of FDIC coverage is something to note. The rates may change daily. View current rates here.

After you open via app, you can see the account balances at Fidelity.com but you’ll still need the app to change any settings. Here’s a screenshot from my app.

Fidelity recently shut down another of its experimental apps called “Fidelity Spire”, so we’ll see if this one catches on a bit better.

For posterity, here are the terms & conditions for the (expired) $100 limited-time offer:

This offer is valid for new or existing Fidelity Brokerage Services LLC (“Fidelity”) customers who make an initial total deposit of at least $50 (“Qualifying Deposit”) into their Fidelity Bloom Spend account or Fidelity Bloom Save account on or after August 13, 2023 through the Fidelity Bloom app. This offer is limited to one cash award per individual. For clarity, existing Bloom clients who have not yet made any deposits into either of their Fidelity Bloom Spend or Fidelity Bloom Save accounts can participate in this offer by making a Qualifying Deposit by August 27, 2023. Existing Fidelity customers who have previously made deposits into their Fidelity Bloom Spend or Save accounts, including individuals who have already participated in the Bloom $50 offer, are not eligible for this offer.

Filed Under: Banking, Deals & Offers, Investing
Last updated: July 11, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

2024 Retirement and Benefit Plan Limit Increases: 401k, 403b, IRA, HSA, DCFSA

January 2, 2024 By Jonathan Ping 1 Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

The beginning of the year is also a good time to check on the new annual contribution limits for retirement and benefit accounts, many of which are indexed to inflation. Our respective incomes have been quite variable these last few years, so I regularly adjust our paycheck deferral percentages based on expected income for the year. I still try to max things out if I can, or at least stay on pace to do so. This 2024 SHRM article and this 2024 IRS article have a nice summary of 2024 vs. 2023 numbers for most employer-based retirement and benefit accounts.

401k/403b Employer-Sponsored Accounts.

For example, you could break down your applicable limit down into monthly and bi-weekly amounts:

  • $23,000 annual limit = $1,916.67 per monthly paycheck.
  • $23,000 annual limit = $884.61 per bi-weekly paycheck.

The higher maximum limits are useful are for those folks that have the ability to contribute extra money into their 401k accounts on an after-tax basis (and then potentially perform an in-service Roth rollover), or those self-employed persons with SEP IRAs or Self-Employed 401k plans.

If you are contributing to a pre-tax account instead of a Roth, you could also use a paycheck calculator to find the detailed impact to your after-tax “take home” pay.

Even if you aren’t hitting the limits, consider increasing your salary deferral contribution rate 1% higher than last year. This can still make a substantial difference if you keep it up.

Traditional/Roth IRAs. The annual contribution limits are up $500 from last year, now $7,000 with an additional $1,000 allowed for those age 50+.

  • $7,000 annual limit = $583.33 per monthly paycheck.
  • $7,000 annual limit = $269.23 per bi-weekly paycheck.

Most brokerage accounts (Vanguard, Fidelity, M1 Finance) will allow you to set up automatic investments on a weekly, biweekly, or monthly basis. As long as you have enough money in your linked checking account, the broker will transfer the cash over and then invest it on a recurring basis. You may even be able to sync it to take out money the very same or next business day as when your paycheck hits (for example, every other Monday after your paycheck hits every other Friday).

Health Savings Accounts are often treated as the equivalent of a “Healthcare IRA” due the potential triple tax benefits (tax-deduction on contributions, tax-deferred growth for decades, and tax-free withdrawals towards qualified healthcare expenses). This assumes that you have a high-deductible health insurance plan (more popular every year as they are cheaper for employers too), you can cover your current healthcare expenses out-of-pocket, and you can still afford to contribute to the HSA. Up a little for 2024.

Healthcare Flexible Spending Accounts are still an commonly-available option for others. Up a little for 2024.

Dependent Care FSAs are easy tax savings if you have children in daycare and/or preschool. These are not indexed to inflation. They can also be used to pay for before and afterschool supervision and summer day camps.

Filed Under: Investing, Retirement
Last updated: January 2, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

2023 Year-End Review: Annual Broad Asset Class & Target Fund Returns

January 1, 2024 By Jonathan Ping 3 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Happy New Year! 🎉 🥳 It’s time to take a look back and see how the year went for the broad asset classes that I track. Per Morningstar, here are the total annual returns (includes price appreciation and dividends/interest) for select asset classes as benchmarked by popular ETFs after market close 12/29/23.

The “set and forget” Vanguard Target Retirement 2055 fund (VFFVX) , currently consisting of roughly 90% diversified stocks and 10% bonds, was up 20.2% in 2023, almost but not quite overcoming the drop in 2022.

Commentary. Historically, the S&P 500 annual return is negative in roughly every 1 in 4 years. In 2020 and 2021 nearly everything went up, while in 2022 nearly everything went down.

Even as of late October, it wasn’t clear if 2023 would end with positive returns:

For most of us, the best we can do is to “stay the course” and enjoy the up years while knowing that the down years will inevitably be sprinkled in there. I try my best not to listen to predictions, or even listen to daily market close announcements. If you stand by the roulette table and stare long enough at the red and black numbers that come up, your mind will start to find patterns where they don’t exist.

Instead, I prefer to dig around for these “long view” numbers. For example, if you had been a steady investor in the popular Vanguard Target Retirement 2055 fund over the past several years, your cumulative returns have been solid despite the many problems of the world:

Filed Under: Investing
Last updated: January 1, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Top FDIC-Insured Savings Account Interest Rate vs. Inflation (2017-2023)

December 15, 2023 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Whenever an article mentions the “average savings account rate”, I find that information useless. There are a lot of zeros in that average! But this Axios article has an interesting chart comparing the top savings rate vs. the rolling 3-month inflation rate from January 2017 through December 2023. That’s more applicable. Via reader Bill.

This serves as a good reminder that back in July 2021, the absolute top interest rate on an FDIC-insured savings account was redlining at… 1.00% APY. And that was actually a very good relative rate as the Vanguard money market fund with a yield of essentially zero (0.01% APY). Conservative savers had a very hard time earning hardly any interest and were falling behind inflation.

As of December 2023, you are now able to take zero principal risk and yet earn 5% from both the top savings accounts and the top money market funds. Every $10,000 should earn you $500 a year in interest. Every $100,000 should earn you $5,000 a year in interest. $1,000,000 will earn out $50,000 year, absolutely guaranteed. Best of all, that amount is finally a good margin higher than inflation at the moment.

But for those of us with long investing horizons, we must remember that over that long horizon, cash (as tracked by Treasury bills) has historically only just barely kept up with inflation. Sometimes cash wins, sometimes inflation wins, but over the long arc, it’s basically been a a draw. Even if we rate-chase and gain an extra 1% of “alpha”, that’s historically still not as good as stocks for the long run.

So while I still chase rates, 2/3rds of my investment portfolio remains held permanently in stocks. Here’s a chart of the S&P 500 total return for 2023 year-to-date (credit Ycharts). Up 25% as of this writing (12/14/23).

I did not predict that. This should also serve as a reminder that any 2024 S&P 500 forecasts you read this month are also garbage.

Filed Under: Banking, Deals & Offers, Investing, Retirement
Last updated: December 15, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Mint to Credit Karma Transition: Financial Account Tracking and Budgeting Alternatives

December 11, 2023 By Jonathan Ping 19 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Mint.com, the financial dashboard and budget tracking website bought by Intuit in 2009, is “shutting down” on January 1st, 2024 (update: now extended to March 2024). Shutting down doesn’t feel like quite the right word, as though the Mint brand is going away, Intuit is transitioning nearly all the core Mint features into Credit Karma, also owned by Intuit.

💰 Credit Karma. Basic balance tracking for free with ads. Direct import from Mint. Known best for their free credit scores and free credit monitoring services, Intuit bought Credit Karma in 2020 (sense a trend?). If you want to continue with tracking account balances, monitor overall spending broken down by category, and be shown ads for credit cards, then you can just migrate all your info to Credit Karma without having to type in all your logins again. Honestly, this seems like a reasonable merger as both used an ad-supported free service model, although the Credit Karma ads are definitely more prominent.

I am already a Credit Karma user for the free credit monitoring, but have not been invited to the formal migration yet. I plan on migrating and giving them a chance first, although I think the current CK website is quite… ugly. The app screenshots look a lot better, so we’ll see. Feature-wise, their FAQ makes it sound pretty similar to what Mint used to offer:

You will be able to bring the majority of your Mint financial account balances, your entire net worth history, plus all of your supported account connections and transactions.

Here are a few more non-Intuit alternatives to Mint to consider:

💰 Quicken Simplifi. Fully featured with automation and forecasting features. No ads for a monthly fee. Quicken has made a more “Mint-like” version called Quicken Simplifi, and the regular price is $3.99/month (discounted 50% to $2/month for first year currently). Deemed “Best Budgeting App” by Wirecutter.

💰 Empower Dashboard. Free financial account tracking more focused on investments and asset allocation. Well, free with one sales phone call. I personally use Empower (formerly Personal Capital) to track all of my investments across different brokerage accounts and 401k providers. Empower also tracks bank accounts, but due to habit I initially preferred to use Mint to track all of my cash across different banks and credit unions. Empower is probably my fallback if Credit Karma gets too annoying, as I’m already familiar with it (and it’s also free with no ads).

I like to tell people upfront that even though it is “free”, after you sign up for Personal Capital, they will call you on the phone to see if you might like their financial planning service. This is how Empower makes money, and I’m fine with that. If you ignore their calls, they will keep calling. If you answer it once and politely decline, they will never call you again (it’s been years and years now) and let you use the dashboard completely free and in peace (and without huge banner ads). I highly suggest the latter option.

💰 Money by Envestnet Yodlee. Free, basic account tracking. No ads. Yodlee was one of the earliest aggregators that allowed you to view all of your balances in one place. Envestnet is a provider of technology for wealth management and financial advisors, and bought Yodlee in 2015. They appear to make most of their money selling this aggregation service to large financial institutions and now financial advisors for wealthy clients, and I can only guess that they offer this “Money” dashboard without ads (or support) as a sort of free beta testing preview for individuals. If you just want to see your various balances in a nice barebones list and don’t need any additional cool features, this may fill all your needs. Note that in my limited experience, Yodlee has more connection issues with certain banks and credit unions than Mint or Plaid, so test it out first.

💰 Monarch Money. Fully-featured budget tracking. No ads. $99 per year regular price. If you wished Mint would have stayed an independent company and continued adding new features and stayed alive by charging money for those features, Monarch Money has the closest feel to that. I haven’t used it myself, but that is certainly my impression after reading through its website, looking at the UI screenshots, and skimming reviews. It uses rollover budgeting like YNAB (You Need A Budget), which is has a very similar feature set and pricing to Monarch Money. It does come in at the highest price here at $15.99/month or $99 a year (discounted to $50 for first year with code MINT50).

This is by no means an exhaustive list. Where will you be going when the Mint.com site shuts down in 2024?

Filed Under: Banking, Deals & Offers, Investing
Last updated: January 9, 2024
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Best Interest Rates on Cash – December 2023

December 6, 2023 By Jonathan Ping 2 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

If you’re leaving your cash in a checking account earning zero interest, you’re missing out on a lot of potential interest. Here’s my monthly roundup of the best interest rates on cash as of December 2023, roughly sorted from shortest to longest maturities. There are often lesser-known opportunities available to individual investors. Check out my Ultimate Rate-Chaser Calculator to see how much extra interest you could earn from switching. Rates listed are available to everyone nationwide. Rates checked as of 12/6/2023.

TL;DR: Mostly minor movements. 6% APY now (barely) available with 12-month CD and a new 7% APY rewards checking accounts. More 5%+ savings accounts. Compare against Treasury bills and bonds at every maturity, taking into account state tax exemption.

Fintech accounts
Available only to individual investors, fintech companies often pay higher-than-market rates in order to achieve fast short-term growth (often using venture capital). “Fintech” is usually a software layer on top of a partner bank’s FDIC insurance.

  • 5.30% APY ($1 minimum). Raisin lets you switch between different FDIC-insured banks and NCUA-insured credit unions easily without opening a new account every time, and their liquid savings rates currently top out at 5.30% APY amongst multiple banks. See my Raisin review for details. Raisin does not charge depositors a fee for the service.
  • 5.36% APY (before fees). MaxMyInterest is another service that allows you to access and switch between different FDIC-insured banks. You can view their current banks and APYs here. As of 12/6/23, the highest rate is from Customers Bank at 5.36% APY. (At the moment, Customers is also the top bank at SaveBetter at 5.30% APY.) However, note that they charge a membership fee of 0.04% per quarter, or 0.16% per year (subject to $20 minimum per quarter, or $80 per year). That means if you have a $10,000 balance, then $80 a year = 0.80% per year. This service is meant for those with larger balances. You are allowed to cancel the service and keep the bank accounts, but then you may lose their specially-negotiated rates and cannot switch between banks anymore.

High-yield savings accounts
Since the huge megabanks STILL pay essentially no interest, everyone should have a separate, no-fee online savings account to piggy-back onto your existing checking account. The interest rates on savings accounts can drop at any time, so I list the top rates as well as competitive rates from banks with a history of competitive rates. Some banks will bait you with a temporary top rate and then lower the rates in the hopes that you are too lazy to leave.

Short-term guaranteed rates (1 year and under)
A common question is what to do with a big pile of cash that you’re waiting to deploy shortly (plan to buy a house soon, just sold your house, just sold your business, legal settlement, inheritance). My usual advice is to keep things simple and take your time. If not a savings account, then put it in a flexible short-term CD under the FDIC limits until you have a plan.

  • No Penalty CDs offer a fixed interest rate that can never go down, but you can still take out your money (once) without any fees if you want to use it elsewhere. Raisin has a 12-month No Penalty CD at 5.41% APY with $1 minimum deposit. CIT Bank has a 11-month No Penalty CD at 4.90% APY with a $1,000 minimum deposit. Ally Bank has a 11-month No Penalty CD at 4.55% APY for all balance tiers. Marcus has a 13-month No Penalty CD at 4.60% APY with a $500 minimum deposit. Consider opening multiple CDs in smaller increments for more flexibility.
  • CIBC Agility Online has a 12-month CD at 5.66% APY. Reasonable 30-day penalty if you withdraw your CD funds before maturity. They are the online division of CIBC Bank. CIBC Agility also has an ongoing savings deposit bonus that can work out to a good APY while maintaining some flexibility.

Money market mutual funds + Ultra-short bond ETFs*
Many brokerage firms that pay out very little interest on their default cash sweep funds (and keep the difference for themselves). * Money market mutual funds are regulated, but ultimately not FDIC-insured, so I would still stick with highly reputable firms. I am including a few ultra-short bond ETFs as they may be your best cash alternative in a brokerage account, but they may experience losses.

  • Vanguard Federal Money Market Fund is the default sweep option for Vanguard brokerage accounts, which has an SEC yield of 5.30% (changes daily, but also works out to a compound yield of 5.43%, which is better for comparing against APY). Odds are this is much higher than your own broker’s default cash sweep interest rate.
  • The PIMCO Enhanced Short Maturity Active Bond ETF (MINT) has a 5.61% SEC yield and the iShares Short Maturity Bond ETF (NEAR) has a 5.54% SEC yield while holding a portfolio of investment-grade bonds with an average duration of ~6 months.

Treasury Bills and Ultra-short Treasury ETFs
Another option is to buy individual Treasury bills which come in a variety of maturities from 4-weeks to 52-weeks and are fully backed by the US government. You can also invest in ETFs that hold a rotating basket of short-term Treasury Bills for you, while charging a small management fee for doing so. T-bill interest is exempt from state and local income taxes, which can make a significant difference in your effective yield.

  • You can build your own T-Bill ladder at TreasuryDirect.gov or via a brokerage account with a bond desk like Vanguard and Fidelity. Here are the current Treasury Bill rates. As of 12/5/23, a new 4-week T-Bill had the equivalent of 5.39% annualized interest and a 52-week T-Bill had the equivalent of 5.06% annualized interest.
  • The iShares 0-3 Month Treasury Bond ETF (SGOV) has a 5.24% SEC yield and effective duration of 0.10 years. SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) has a 5.26% SEC yield and effective duration of 0.08 years.

US Savings Bonds
Series I Savings Bonds offer rates that are linked to inflation and backed by the US government. You must hold them for at least a year. If you redeem them within 5 years there is a penalty of the last 3 months of interest. The annual purchase limit for electronic I bonds is $10,000 per Social Security Number, available online at TreasuryDirect.gov. You can also buy an additional $5,000 in paper I bonds using your tax refund with IRS Form 8888.

  • “I Bonds” bought between November 2023 and April 2024 will earn a 5.27% rate for the first six months. The rate of the subsequent 6-month period will be based on inflation again. More on Savings Bonds here.
  • In mid-April 2023, the CPI will be announced and you will have a short period where you will have a very close estimate of the rate for the next 12 months. I will have another post up at that time.

Rewards checking accounts
These unique checking accounts pay above-average interest rates, but with unique risks. You have to jump through certain hoops which usually involve 10+ debit card purchases each cycle, a certain number of ACH/direct deposits, and/or a certain number of logins per month. If you make a mistake (or they judge that you did) you risk earning zero interest for that month. Some folks don’t mind the extra work and attention required, while others would rather not bother. Rates can also drop suddenly, leaving a “bait-and-switch” feeling.

  • OnPath Federal Credit Union pays 7.00% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, and login to online or mobile banking once per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
  • Credit Union of New Jersey pays 6.00% APY on up to $25,000 if you make 15 debit card purchases, opt into online statements, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via $5 membership fee to join partner organization.
  • Pelican State Credit Union pays 6.05% APY on up to $10,000 if you make 15 debit card purchases, opt into online statements, log into your account at least once, and make at least 1 direct deposit, online bill payment, or automatic payment (ACH) per statement cycle. Anyone can join this credit union via partner organization membership.
  • Orion Federal Credit Union pays 6.00% APY on up to $10,000 if you make electronic deposits of $500+ each month (ACH transfers count) and spend $500+ on your Orion debit or credit card each month. Anyone can join this credit union via $10 membership fee to partner organization membership.
  • All America/Redneck Bank pays 5.30% APY on up to $15,000 if you make 10 debit card purchases each monthly cycle with online statements.
  • Find a locally-restricted rewards checking account at DepositAccounts.

Certificates of deposit (greater than 1 year)
CDs offer higher rates, but come with an early withdrawal penalty. By finding a bank CD with a reasonable early withdrawal penalty, you can enjoy higher rates but maintain access in a true emergency. Alternatively, consider building a CD ladder of different maturity lengths (ex. 1/2/3/4/5-years) such that you have access to part of the ladder each year, but your blended interest rate is higher than a savings account. When one CD matures, use that money to buy another 5-year CD to keep the ladder going. Some CDs also offer “add-ons” where you can deposit more funds if rates drop.

  • Workers Credit Union has a 5-year CD at 5.25% APY. $500 minimum. The early withdrawal penalty is half of the dividends that the withdrawn amount would have earned for the remaining term. Anyone can join this credit union via partner organization.
  • Farmer’s Insurance FCU has their 3, 6, 9, 12, 18, 24, 36, 48, or 60 month CDs ALL at 5.00% APY for a limited-time. $1,000 minimum. The early withdrawal penalty for all terms longer than a year is 180 days of dividends OR half of the remaining term’s daily dividends, whichever is greater. Anyone can join this credit union via partner organization.
  • BMO Alto has a 5-year CD at 4.90% APY. 4-year at 4.90% APY. 3-year at 5.00% APY. 2-year at 5.25% APY. 1-year at 5.65% APY. No minimum. The early withdrawal penalty (EWP) for CD maturities of 1 year or more is 180 days of interest. For CD maturities of 11 months or less, the EWP is 90 days of interest. Note that they reserve the right to prohibit early withdrawals entirely. Online-only subsidiary of BMO Bank.
  • You can buy certificates of deposit via the bond desks of Vanguard and Fidelity. You may need an account to see the rates. These “brokered CDs” offer FDIC insurance and easy laddering, but they don’t come with predictable early withdrawal penalties. Right now, I see a 5-year non-callable CD at 4.45% APY (callable: no, call protection: yes). Be warned that now both Vanguard and Fidelity will list higher rates from callable CDs, which importantly means they can call back your CD if rates drop later.

Longer-term Instruments
I’d use these with caution due to increased interest rate risk, but I still track them to see the rest of the current yield curve.

  • Willing to lock up your money for 10 years? You can buy long-term certificates of deposit via the bond desks of Vanguard and Fidelity. These “brokered CDs” offer FDIC insurance, but they don’t come with predictable early withdrawal penalties. You might find something that pays more than your other brokerage cash and Treasury options. Right now, I see a 10-year CDs at 4.25% (callable: no, call protection: yes) vs. 4.15% for a 10-year Treasury. Watch out for higher rates from callable CDs where they can call your CD back if interest rates drop.

All rates were checked as of 12/6/2023.

Filed Under: Banking, Deals & Offers, Investing
Last updated: December 7, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

Daffy DAF Review: The Best Donor Advised Fund For Smaller Individual Investors?

December 6, 2023 By Jonathan Ping 14 Comments
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Updated review 2023. A donor-advised fund (DAF) helps you manage the timing of your charitable giving while also maximizing your tax benefits (allowing you to give more). You get the tax break at the time of contribution, which means you can give more when your income and tax rates are higher.

Donating appreciated stock or mutual fund shares (or crypto) is one of the most efficient ways to donate. You avoid both paying taxes on capital gains and get a tax deduction for the full current market value if you itemize. Here is an examples of the double tax advantage of donating appreciated stock. Your contributions can then be invested to grow a tax-deferred manner until you decide to make a grant to the charities of your choice.

One problem for small investors is that the “Big 3” of DAFs: Fidelity, Vanguard, and Schwab all charge annual administrative fees of 0.60% of assets with a minimum fee of $100 to $250. (Update: As of 2024, Schwab no longer has a minimum asset-based fee.) In addition, you are usually stuck with a limited menu of investment options, many of which may have expense ratios that are higher than common index ETFs. Vanguard has cheaper options, but they have a $25,000 minimum opening amount. Both the account management fees and portfolio investment fees are funds skimmed away from the charities themselves.

Daffy is a newer DAF startup that charges only $3 a month, or a flat $36 a year regardless of asset size. Importantly, this tier now also allows the donation up to $25,000 in appreciated stock (lifetime cumulative). Their 13 preset portfolios include ones with four low-cost and broad Vanguard ETFs (VTI, VXUS, BND, and BNDX) with a rock-bottom overall expense ratio of as low as 0.05%.

If you are an individual investor that also wants to donate a modest amount of appreciated stock from any brokerage, the end result is that with Daffy, a larger percentage of your donation will end up going to charity.

Personally, I’ve had a Fidelity Charitable DAF for a few years now, and it has been a smooth experience even though I am a small fry customer. I am able to donate appreciated assets from my Fidelity brokerage accounts with ease, and then give most of it away. I don’t maintain an exceptionally large balance (so I worry less about the portfolio fees), and my fees are the $100 a year minimum.

Other competitors include CharityVest, which has a higher $4/month minimum (0.40% asset-based) but also no limit on the amount of appreciated securities that you can donate. The 0.40% asset-based fee does mean that starting at a $12,000 balance, you are going to exceed the $4/month minimum. They do offer a low-cost ETF portfolios.

$25 referral bonus (for charity). I have just opened a Daffy account to try them out. I was able to contribute up to $1,000 initially via credit card with no processing fees. I discovered that if you open via a my Daffy referral link, you will get an extra $25 in your DAF after funding. If four people open with my link, I will get $100 added to my charitable fund. (All proceeds on both sides go into the DAF, and thus will eventually go to a charitable non-profit.)

Bottom line. If you plan on donating modest amounts of appreciated assets under their $25,000 lifetime limit, then Daffy is the lowest-cost DAF that I am aware of that lets you manage the timing of your charitable contributions and invest it tax-free until you decide to make a grant. (Update: As of 2024, Schwab no longer has an asset minimum. Thus, if you hold less than $6,000 in the Schwab DAF at 0.60% fee, then your annual account fee will be lower than Daffy’s flat $36 a year.)

Filed Under: Deals & Offers, Giving Back, Investing
Last updated: January 5, 2024
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Charlie Munger CNBC Final Interview 2023: Highlights & Transcript

December 4, 2023 By Jonathan Ping Leave a Comment
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone.

Charlie Munger held his last in-depth interview with CNBC’s Becky Quick in mid-November 2023. The interview was meant for a 1-hour special celebrating Munger’s 100th birthday, but was re-edited to become “Charlie Munger: A Life of Wit and Wisdom”. I don’t have cable TV anymore, but CNBC has thankfully released a full text transcript and will upload the full, uncut video the CNBC Buffett Archives site shortly (update: here is the extended version).

I highlighted a few Munger quotes below along with brief commentary. If you aren’t familiar with the “greatest hits” of Munger wisdom, definitely check out the full transcript or video. I will definitely miss mining through these interviews for the “new to me” gold.

Playing the hand you are dealt.

…I just played the hand I was dealt in order to get as much advantage as I could. And that’s what everybody else does too. They play the hand that was dealt to get as much advantage as they possibly can.

Think about the country/environment you were born, your parents, and your genetically-influenced gifts and challenges. Those are three huge things, and none of us had any choice in any of them. In fact, I’m certain many of you readers have overcome more obstacles than I can imagine. I hope to teach my children about appreciating their blessings, accepting their challenges, and to keep striving while giving grace to others. Heck, I hope to teach myself that too. Work in progress…

Stay in your circle of competence. I definitely believe that you need to enjoy what you’re doing to do it well, but I am also a firm believer in practical considerations.

And so I decided to stay the hell out of businesses where I would compete with people like Eddie Davis, Jr. and Eddie Davis, Sr. in their strong suit.

BECKY QUICK: Knowing your competencies.

CHARLIE MUNGER: Knowing your circle of competency. Right. And that kept me away from those businesses totally.

Maintain a margin of safety.

But really, it’s knowing you can have a very bad day. Do not live your life in such a fashion that a bad day can kill you.

But also be ready to take risks when the odds are in your favor.

But Grandfather Ingham just talked endlessly about the early days and how he’d surmounted all these hardships. And he says that it looks pretty easy, “looking back at it with retrospect, but it was damn hard, I want you to know.” And he said, “And in reviewing my life, what your grandchildren have to realize, it was his version of Robinson Crusoe, he told every grandchild, “Is when they give you a real opportunity, the world’s not gonna do it very often. And you’re only gonna get three or four of these invitations to the pie counter. And when you get your invitation, for God sakes, don’t take a small helping.” He basically said, “Lever up when you’re sure you’re right.” And of course that’s good advice. But be sure you’re right is what makes it hard. How can you be sure you’re right? Well, but you can’t. That’s the point. You can’t do it very often.

“Everyone struggles.”

BECKY QUICK: I mean, Charlie, people probably look at you and think you’re incredibly wealthy, you’ve had all these great opportunities and things that have happened in your life. But you’ve struggled too.

CHARLIE MUNGER: Of course. Everybody struggles. The iron rule of life is everybody struggles.

BECKY QUICK: I try and think back of what the toughest moments might’ve been and how you got through some of those. And, I mean–

CHARLIE MUNGER: Well, we all know how to get through them. The great philosophers of realism are also the great philosophers of what I call soldiering through. If you soldier through, you can get through almost anything. And it’s your only option. You can’t bring back the dead, you can’t cure the dying child. You can’t do all kinds of things. You have to soldier through it. You just somehow you soldier through. If you have to walk through the streets, crying for a few hours a day as part of the soldiering, go ahead and cry away. But you have to – you can’t quit. You can cry all right, but you can’t quit.

BECKY QUICK: You’ve had time in your life when you’ve done that?

CHARLIE MUNGER: Sure. I cried all the time when my first child died. But I knew I couldn’t change the fate. In those days, the fatality with childhood leukemia was 100%.

One of the things you’ll notice is that none of these quotes offer easy advice. It’s all annoyingly difficult stuff like keep plowing ahead, take smart risks, maintain reasonable expectations.

For some reason, I am always reminded of an old beer commercial (wish I could find the clip) where a man talks about raising his kids and finally sending them off to college. He basically says it was a long and hard journey and the other guy in the bar says something like “Well, you should be proud.” And the first guy realizes “Yeah, I should.” Nobody else knows all of your struggles. You don’t have to become a billionaire to be proud of your accomplishments.

Filed Under: Inspirational, Investing
Last updated: December 17, 2023
My Money Blog has partnered with CardRatings and may receive a commission from card issuers. Some or all of the card offers that appear on this site are from advertisers and may impact how and where card products appear on the site. MyMoneyBlog.com does not include all card companies or all available card offers. All opinions expressed are the author’s alone, and has not been provided nor approved by any of the companies mentioned.

MyMoneyBlog.com is also a member of the Amazon Associate Program, and if you click through to Amazon and make a purchase, I may earn a small commission. Thank you for your support.

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